2. Meralco Industrial Engineering Services, Co., vs.
NLRC
Facts:
Meralco and the private respondent executed a contract
where the latter would supply the petitioner janitorial services,
which include labor, materials, tools and equipment, as well as
supervision of its assigned employees, at Meralco’s Rockwell
Thermal Plant in Makati City.
The 49 employees lodged a Complaint for illegal
deduction, underpayment, non-payment of overtime pay, legal
holiday pay, premium pay for holiday and rest day and night
differentials against the private respondent before the LA.
By virtue of RA 6727, the contract between Meralco and
the private respondent was amended to increase the minimum
daily wage per employee. 2 months after the amendment of the
contract, Meralco sent a letter to private respondent informing
them that at the end of business hours of Jan. 31, 1990, it would
be terminating contract entered into with the private respondents.
On the said date, the complainants were pulled out from their
work. The complainants amended their complaint to include the
charge of illegal dismissal and to implead Meralco as a party
respondent.
The LA dismissed the complaint. On appeal, the NLRC
affirmed the decision of the LA with the modification that Meralco
was solidarily liable with the private respondents. The CA on the
other hand, modified the Decision of the NLRC and held Meralco
to be solidarily liable with the private respondent for the
satisfaction of the laborer’s separation pay.
Issue:
Whether Meralco should be liable for the payment of
the dismissed laborer’s separation pay.
Decision:
Petition GRANTED, Judgment and Resolution
Reversed and SET ASIDE.
The CA used Art. 109 of the Labor Code to hold
Meralco solidarily liable with the private respondent as regard to
the payment of separation pay. However, the SC ruled that Art.
109 should be read in relation to Art. 106 and 107 of the LC.
Thus, an indirect employer can only be held liable with the
independent contractor or subcontractor in the event that the
latter fails to pay the wages of its employees. While it is true that
the petitioner was the indirect employer of the complainants, it
cannot be held liable in the same way as the employer in every
respect. Meralco may be considered an indirect employer only
for purposes of unpaid wages.
The only instance when the principal can also be held
liable with the independent contractor or subcontractor for the
backwages and separation pay of the latter’s employees is when
there is proof that the principal conspired with the independent
contractor or subcontractor in the illegal dismissal of the
employees. In the present case, there is no allegation, much less
proof presented, that the petitioner conspired with private
respondents in the illegal dismissal of the latter’s employees;
hence, it cannot be held liable for the same.
Neither can the liability for the separation pay of the
complainants be extended to the petitioner based on contract.
Contract Order No. 166-84 executed between the petitioner and
the private respondents contains no provision for separation pay
in the event that the petitioner terminates the same. It is basic
that a contract is the law between the parties and the stipulations
therein, provided that they are not contrary to law, morals, good
customs, public order or public policy, shall be binding as
between the parties. Hence, if the contract does not provide for
such a liability, this Court cannot just read the same into the
contract without possibly violating the intention of the parties.
Although petitioner is not liable for complainants’
separation pay, the Court conforms to the consistent findings in
the proceedings below that the petitioner is solidarily liable with
the private respondents for the judgment awards for
underpayment of wages and non-payment of overtime pay.
In this case, however, private respondents had already
posted a surety bond in an amount sufficient to cover all the
judgment awards due the complainants, including those for
underpayment of wages and non-payment of overtime pay.
The
joint and several liability of the principal with the contractor and
subcontractor were enacted to ensure compliance with the
provisions of the Labor Code, principally those on statutory
minimum wage. This liability facilitates, if not guarantees,
payment of the workers’ compensation, thus, giving the workers
ample protection as mandated by the 1987 Constitution. With
private respondents’ surety bond, it can therefore be said that
the purpose of the Labor Code provision on the solidary liability
of the indirect employer is already accomplished since the
interest of the complainants are already adequately protected.
Consequently, it will be futile to continuously hold the petitioner
jointly and solidarily liable with the private respondents for the
judgment awards for underpayment of wages and non-payment
of overtime pay.
But while this Court had previously ruled that the
indirect employer can recover whatever amount it had paid to the
employees in accordance with the terms of the service contract
between itself and the contractor, the said ruling cannot be
applied in reverse to this case as to allow the private
respondents (the independent contractor), who paid for the
judgment awards in full, to recover from the petitioner (the
indirect employer).
